Josh Frydenberg hopes his budget will fire up the economy from the depths of recession to see growth expanding at a rapid 4.75 per cent in the next financial year.
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But it comes at a cost, with the budget deficit ballooning to a record $213.7 billion in 2020/21 - dwarfing the $85.3 billion in the Past financial year - and with government debt exceeding $1 trillion by 2021/22.
"This is a heavy burden, but a necessary one to responsibly deal with the greatest challenge of our time," the treasurer said as he handed down his second budget on Tuesday.
"There remains a monumental task ahead. Our plan will grow the economy. Our plan will create jobs. Our plan will continue to guarantee the essential services Australians rely on."
After predicting a series of surpluses in his last year's budget, the coronavirus pandemic has seen the economy sink into its first recession in 30 years and a sea of deficits are now forecast as far as the eye can see.
"No one expected the sort of storm of the sort of magnitude that Australia and the world has had to confront this year," Finance Minister Mathias Cormann told reporters during the budget lock-up.
"But the hard work we have done as a nation during our first six years in government has put us in a strong position to do what was needed to be done when the pandemic and the COVID recession hit."
However, Treasury has further trimmed back its forecast for the unemployment rate peak to eight per cent by the December quarter this year, having previously predicted a top of around nine per cent.
It had thought the jobless rate would exceed 10 per cent when COVID-19 first hit Australia's shores.
The government has shelved its pledge to pursue surpluses until the unemployment rate is comfortably below six per cent.
The budget does not forecast an unemployment rate of 5.5 per cent until 2023/24. It was 6.8 per cent in August.
As such, wages growth is expect to remain subdued and below two per cent until 2022/23.
Inflation, too, is expected to remain benign across the four-year budget estimates, and below the mid-point of the Reserve Bank of Australia's two-three per cent target band.
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Earlier on Tuesday, the central bank left the cash rate unchanged at a record low 0.25 per cent at its usual monthly board meeting.
RBA governor Philip Lowe again pledged not to lift the cash rate until there was progress towards full employment and inflation was back in its target band.
Economists expect the central bank could trim the cash rate to 0.10 per cent, when the board meets in November, to support the economic recovery.
The budget adds to a flurry of announcements over the past week offering initiatives to encourage businesses, particularly smaller ones, to hire young Australians, boost investment and offset some of their losses.
The much-speculated bringing forward of already legislated income tax cuts was confirmed on Tuesday, meaning more than 11 million taxpayers will get a tax cut backdated to July 1 this year.
The government is also retaining its low and middle income tax offset for an additional year.
"These tax cuts will put more money into people's pockets and that money will be spent across the economy and that money will help to create jobs," Mr Frydenberg told reporters in the budget lock-up.
Australian Associated Press
